There's a new ETF in town and it centers around one famous U.S. city. Exchange traded funds have long had crazy ideas and centralized focuses. LocalShares is bringing the Nashville Area ETF (NYSEARCA:NASH) in a first attempt at funds connected through one city.
Elizabeth Seigethaler Courtney, CEO of LocalShares, had this to say of the fund, "We developed LocalSahres after an intense 3 1/2 year planning and due diligence phase based on a very important core premise and that is that there are cities and very specific regional markets that benefit the companies that are located and headquartered there."
Stocks have several requirements to be a part of the fund. The company must be headquartered in Davidson County, home of Nashville. Companies must have a market capitalization of at least $100 million. Shares must have average volume of 50,000 per trading day.
The fund will have a unique weighting system. The companies will start with an equal weighting, but will then be re-adjusted every quarter. The re-adjustment will take into account seven different items including yield, growth and average trading price.
The fund, which began trading July 31st, has 100,000 shares trading currently. A total of $2.5 million in assets is held by the fund. The annual expense range is 0.49%. Here is a look at the current top five holdings:
· Delek Holdings (NYSE:DK): 7.4%
· HCA Holdings (NYSE:HCA): 6.8%
· Tractor Supply (NASDAQ:TSCO): 6.2%
· Community Health (NYSE:CYH): 6.1%
· Cracker Barrel (NASDAQ:CBRL): 5.7%
Investors will see several familiar names in the ETF like Tractor Supply, Cracker Barrel, Genesco and Dollar General. For me, I think the fund is heavily weighted between REITs and healthcare companies. No payout amount has been announced, but with so many REITs, a strong yield could also be seen from this fund.
Investors can read between the lines and see that this idea could catch on. There are several large cities that host large companies' headquarters. LocalShares hinted at more to come with this. "In fact, I think you could easily make a compelling case for 24 or 25 other cities, and we are in that space."
LocalShares is committed to getting this fund off the ground before it pursues other cities. However, if the fund catches on or shows strong performance based on the company's seven item criteria, more funds could launch soon. Cities like Seattle, Los Angeles, New York, Detroit, Pittsburgh, Philadelphia, Chicago and St. Louis could soon be getting their own ETF. Investors will truly be able to invest in their backyard.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.